Lidl’s parent company cuts back after a mixed record year

German retailer Schwarz Group has posted record sales last year. Yet the parent company of Lidl and Kaufland is only moderately satisfied and announces cutbacks this year.

Less than inflation

The Schwarz Group has a lot to celebrate: its flagship chain Lidl is celebrating its fiftieth anniversary this year and the parent company has had another record year. The year 2022 saw sales grow by 15.4 % to a record of 154.1 billion euros. However, the German group is rather critical of a “financially stable year”, Lebensmittel Zeitung reports.

It is indeed striking that the ‘little sister’ Kaufland has performed better than Lidl. Kaufland hypermarkets grew by 16.1 % to 31.8 billion euros, thanks to the acquisition of around 100 Real shops. At Lidl, sales rose by “only” 13.8 % to 114.8 billion euros, which is below the European food inflation rate of 15 %. In countries outside Germany, Lidl’s sales rose by 7.1 % to 66.7 billion euros, the company revealed earlier.

Far fewer vacancies

Schwarz did not disclose profit figures, but admitted that inflation and rising interest rates were weighing on the group. The group has not been able to fully pass on these cost increases to customers. In Belgium, for example, Lidl made a record loss of over fifty million euros. In other countries, the situation is more nuanced, but overall margins are down.

Of particular concern are the high stocks of non-food products and the resulting costs. “There are savings at every corner”, an anonymous source told the Lebensmittel Zeitung. For example, the number of positions at headquarters has been reduced considerably, with the exception of IT-related positions. Proportionally, there is also less investment, as the investment budget of eigt billion euros has remained the same as the previous year, despite the growth.